Singapore (Platts)--6Feb2013/557 am EST/1057 GMT

The steep cuts in Saudi Aramco's Official Selling Prices differentials for crude cargoes to be loaded in March and heading to Asia came within expectations, said traders Wednesday.

Aramco slashed price differentials for its Asia-bound grades by $1.30-2.10/barrel for March-loading barrels. The crudes are priced against the average of Platts Oman and Dubai monthly crude assessments.

"The [OSPs are] very good for everybody," a trader at a global oil company said.

Another trader at a trading house was surprised at the cuts. "[The cuts in Aramco's OSPs} were a huge surprise," he said.

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Arab Super Light, a condensate grade saw the steepest cut with its differential tumbling $2.10/b from February to Oman/Dubai plus $5.95/b for March.

Arab Extra Light saw the second deepest cut of $1.90/b to Oman/Dubai plus $3.75/b.

Key export grades for Asian refiners Arab Light and Arab Medium were cut by $1.50/b and $1.35/b to Oman/Dubai plus $1.95/b and minus 15 cents/b, respectively. Traders last week had expected the differentials to be cut by around $1/b for Arab Light and Arab Medium before the OSPs were released.

The movement in the cash Dubai/Dubai swap spread during the trading month is taken as an indicator of how Saudi Arabia's OSPs for medium heavy crudes will be set.

The cash Dubai/Dubai swap spread was assessed at an average of $1.01/b during the January trading month, slumping by 93 cents/b from December.

"I think [the OSPs are] good. [The cuts are] within expectation. But some [traders] were expecting [cuts of] over $1.50/b [in the differentials]," another trader said.

Arab Heavy crude saw its OSP differential to Oman/Dubai cut by $1.30/b to minus $2.40/b.

The slash in the OSPs would give incentive to refiners to maximize their term liftings of Saudi Aramco crude grades where possible, with this potentially having a knock on effect on the spot market for other Middle Eastern sour crude grades, said a trader.

"Why pick up the incremental barrel in April if you can get an extra, cheap Saudi barrel? [Refiners will] take as much Saudi [crude] as they can and minimize spot [purchases]," the trader said.

A trader at a North Asian refiner agreed, saying the March OSPs would make the crudes "attractive for [the] refinery."

--Daniel Colover, daniel_colover@platts.com
--Edited by Haripriya Banerjee, haripriya_banerjee@platts.com

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